Russia's Gazprom Has Increasing Political Clout

Russia's largest company, Gazprom, is now the leading supplier of natural gas to Europe. The state-run Russian conglomerate is also expanding into other spheres of the energy business, and adding to its already-considerable media holdings. With Gazprom's influence growing at home and overseas, some fear that Gazprom's value as a political tool is also growing.

It takes five hours to fly from Gazprom's headquarters in Moscow to its most remote outpost. There, gas fields in Siberia have helped Gazprom become Russia's largest extractor of natural gas, accounting for more than 95 percent of the country's production.

The company supplies almost all the gas needs of Central and Eastern Europe as well as the countries of the former Soviet Union. And it owns the world's longest pipeline network which extends for 150,000 kilometers.

So Gazprom is a big deal economically....and is not afraid to use its muscle.

Back in January, the company temporarily cut gas supplies to Ukraine in a pricing dispute -- a move that alarmed European countries which get their supplies of Russian gas through the Ukrainian pipeline.

Sergei Kupriyanov, deputy director of Gazprom's Information Policy Department says there are few alternatives. "Long-term, from the point of view of resources, there is no alternative to Gazprom for European consumers. Maybe they are only realizing it now, and that's why they're expressing nervousness, but it has been clear for a while: there are no other sources of gas like Gazprom, and the European Union's own resources are rapidly shrinking."

As well as its importance abroad, Gazprom's influence on the domestic scene is also growing.

In 2001, it took over the once independent Russian television network NTV, forcing the network's leading journalists to quit. Recently, Gazprom expanded its media holdings by adding radio stations and newspapers.

Gazprom alone generates 8 percent of Russia's national tax revenues. That -- in addition to its media assets -- gives it growing political clout.

Sergei Kolchin is an expert with Moscow's Institute of International Economic and Political Research at the Russian Academy of Sciences. He says Gazprom can be used to solidify popular support for the Kremlin. "Gazprom is a powerful force. It was planned originally as an agent of both the government and the President with regard to Russia's internal issues. That included sponsoring Russian soccer clubs, to developing gas fields in Russia's remotest regions and, of course, developing a certain political force. If you look at the results of the previous elections, up to 80 percent of people in remote mining regions voted for the President, and that's thank to Gazprom's help".

Gazprom spokesman Sergei Kupriyanov denies the company seeks to influence Russian politics -- either directly or through its media holdings. "Gazprom does not play election games. Yes, media participates in covering the election but if you ask any of the editors-in-chief of various Gazprom media outlets, they will tell you they never receive any orders from Gazprom about how things should be done."

Aside from Gazprom, there is another player entering the scene: state-owned Rosneft. Once a minor Russian company, Rosneft acquired the core unit of what once used to be Russia's largest private oil company, Yukos.

Yukos itself was declared bankrupt following the controversial jailing of its owner and Kremlin critic, Mikhail Khodorkovsky, on charges of tax evasion.

Analyst Sergei Kolchin says that aside from silencing the criticism, making sure that the state controls oil revenues has also become extremely important for the Kremlin. "While oil and energy prices were relatively low, the state did not worry about owning oil industry, almost all of it was sold out. In the mid 1990s, Rosneft had almost no assets left and barely existed. When oil and gas prices grew so much, the state realized that it should keep those profitable industries in its hands."

Both Rosneft and Gazprom have become Russia's leading exporters of oil and gas, responding to the growing global demand.

The high prices that buyers are willing to pay for energy means that the companies themselves are becoming major players on Russia's economic and political scene -- much to the benefit of the Kremlin.